Zomato attains operational milestone due to growth in ad biz and financial controls

Achieves operational break even of its businesses in six countriesET Bureau | February 08, 2016, 08:58 IST

Picture source: ThinkStockOnline restaurant discovery and food ordering platform Zomato has achieved operational break even of its businesses in six countries due to growth in core advertisement business and tighter financial controls.

According to a top executive, the company has achieved break even in India, the UAE, Lebanon, Qatar, the Philippines and Indonesia.

The Gurgaon-based company is present in 23 countries, including developed countries like the US, Canada and Australia.

“The biggest reason behind this is increase in revenues, which have doubled in the last four months,” said Zomato CEO Deepinder Goyal. Another reason is significant decrease in burn rate by bringing tighter financial controls.

ET had reported last month that Zomato, which has raised $225 million till now, expects operational break-even by June 2016. For 2014-15, Zomato recorded operating revenue of Rs 96.7 crore and loss before interest, taxes, depreciation and amortisation ofRs 136 crore. Revenues are expected to double this year.

But breaking even by June means that Zomato doesn’t plan to expand to new cities, but start seeing monetisation from geographies it has aggressively expanded to in the last 18 months.

Many have questioned if Zomato, whose valuation is close to $1billion, will be able to justify the Unicorn status given the overall size of the advertisement market. Goyal said that Zomato expects revenue potential from India advertisement business, which accounts for 35% of revenues, at $50 million or Rs 338 crore.

But overseas markets have a bigger potential. “All our other markets have a combined size 14 times than that of India,” said Goyal. Zomato also entered into the food delivery business last year, and it is doing 13,000 orders on an average a week of Rs 575 each. The company competes with players like Rocket Internet’s Foodpanda and local startups like Swiggy and TinyOwl in the delivery business.